BAKER & DANIELS
           300 North Meridian Street, Suite 2700
             Indianapolis, Indiana  46204-1782
                      (317) 237-0300
                    FAX (317) 237-1000
                   www.bakerdaniels.com




                                                  EXHIBIT 5

December 23, 1998


American General Finance Corporation
601 N.W. Second Street
Evansville, Indiana 47708

      Re:  Medium-Term Notes, Series E, 
           Due Nine Months or More from Date of Issue

Ladies and Gentlemen:

 We have acted as counsel to American General Finance 
Corporation, an Indiana corporation (the "Company"), in 
connection with the issuance and sale by the Company of 
up to $1,450,000,000 aggregate principal amount of the 
Company's Medium-Term Notes, Series E, due nine months 
or more from date of issue (the "Notes"), including the 
preparation of:

 (a)  the Company's Registration Statement on Form S-3 
(Registration No. 333-28925) (the "Registration Statement"), 
relating to debt securities and warrants to purchase debt 
securities of the Company;

 (b)  the Prospectus, dated July 2, 1997, included in the 
Registration Statement, as supplemented by the Prospectus 
Supplement, dated August 5, 1997, relating to the Notes 
(together, the "Prospectus"); and  

 (c)  the Indenture, dated as of May 1, 1997, between the 
Company and The First National Bank of Chicago, as trustee, 
pursuant to which the Notes are to be issued (the "Indenture").

 For purposes of this opinion, we have examined originals or 
copies, identified to our satisfaction, of such documents, 
corporate records, instruments and other relevant materials 
as we deemed advisable, and have made such examination of 
statutes and decisions and reviewed such questions of law as 
we have considered necessary or appropriate.  In our 
examination, we have assumed the genuineness of all 
signatures, the legal capacity of all natural persons, the 
authenticity of all documents submitted to us as originals, 
the conformity to original documents of all documents 
submitted to us as copies, and the authenticity of the 
originals of such copies.  As to facts material to this 
opinion, we have relied upon certificates, statements or 
representations of public officials, of officers and 
representatives of the Company and of others, without any 
independent verification thereof. 

 The laws covered by the opinions expressed herein are limited 
to the laws of the State of Indiana.

 On the basis of and subject to the foregoing, we are of the 
opinion that:

 1.   The Company is existing as a corporation under the laws 
of the State of Indiana.

 2.   The Notes have been duly authorized by all necessary action 
by the Board of Directors, and by the Terms and Pricing Committee 
of the Board of Directors, of the Company and, when the variable 
terms of the Notes have been established by any two of the authorized 
officers to whom such authority has been delegated and the Notes 
have been executed and authenticated as specified in the Indenture 
and delivered against payment of the consideration therefor, the 
Notes will be valid and binding obligations of the Company, 
enforceable against the Company in accordance with their terms, 
except as enforcement thereof may be limited by bankruptcy, 
insolvency, fraudulent conveyance, reorganization, moratorium or 
other laws of general applicability relating to or affecting 
enforcement of creditors' rights or by general equity principles.

 We consent to the filing of this opinion as an exhibit to the 
Registration Statement and to the reference to us under the 
heading "Legal Opinions" in the Prospectus.  In giving such 
consent, we do not admit that we come within the category of 
persons whose consent is required under Section 7 of the 
Securities Act of 1933, as amended, or the rules or regulations 
of the Securities and Exchange Commission thereunder.

                          Yours very truly,

                          /s/ BAKER & DANIELS